Boca Raton, Fla., Feb 21 - Diageo Plc, maker of Johnnie Walker whisky and Guinness beer, reaffirmed its 2008 profit forecast on Thursday, as it uses price increases and new products to aid sales in the United States, its most important market.
The world's biggest alcoholic drinks company also relies on its business in faster-growing emerging markets like China and India, according to Nick Rose, chief financial officer of the London-based company.
Diageo still expects operating profit to grow 9 percent this year, Rose said in an interview before the company's presentation at a conference in Florida hosted by the Consumer Analyst Group of New York.
"It's the whole portfolio that is contributing to growth," Rose said. "That is what gives us the confidence to reiterate the guidance. The business is not relying on one single spike."
Rose said there is always going to be "somewhere in the world or some particular brand that's not doing as well as we want," and that a broad geographic footprint helped offset that.
In North America, which accounts for about a third of Diageo's sales, the discretionary budgets of consumers are being challenged by declining home values, higher mortgage payments and increased costs for food and fuel. Nonetheless Rose said Diageo is still seeing sales grow in the 6 to 7 percent range here, since people view spirits as "an affordable luxury."
Rose also said new higher-end products such as Jose Cuervo Platino tequila are helping make it more resistant to a slowdown in spending, which typically hurts the lower end of the price spectrum.
Indeed Rose said Diageo was seeing some weakness at the lowest end of its portfolio, but so-called value brands are such a small part of the total that the impact is minimal.
Diageo has not seen cash-strapped consumers trade down from its brands like Jose Cuervo, Smirnoff, Johnnie Walker and Guinness to cheaper brands, Rose said.
To help offset soaring costs for fuel and raw materials like wheat and barley, Rose said Diageo would raise prices on many of its products this year, but does not expect the increases to hurt sales.